Renegade Oilfield and Align Energy merging

Renegade has found success in Viking play doing pipeline work

Brooks, Medicine Hat, Alta. – Renegade Oilfield Construction Limited, which has a shop in Kindersley as well as Medicine Hat, Alta., is merging with Align Energy Services of Brooks, Alta. Vada Capital, a private equity firm which has had a stake in Renegade, is to be a partner, as Align’s partners sell to Vada, but then buy shares in the company.

The merger came down on Nov. 20, and is expected to take 90 to 120 days for the two companies to integrate.

Pipeline Newsspoke to Dale Casat, partner with Align, on Dec. 10, Geoff Moser, partner with Renegade and Jeff Robson, president and CEO of VADA, on Dec. 11.

Align is based in Brooks, and about a quarter to a third of their employees live in Medicine Hat. That has allowed them to run crews out both centres.

Casat said of Align, “We do facility, maintenance, and pipeline construction. We build gas plants, oil batteries. We’re doing lots of single well batteries with some of our clients. We’ve done some larger pipelines – 20 kilometres and better for various clients. And we take on a lot of the maintenance.”

The maintenance work was key in how they survived the oil downturn that took hold in 2014, and is taking hold yet again now. “That’s the stuff that has to happen. When we went through the recession in ’14, that’s where we focused our resources,” Casat said.

Align has done some work in Saskatchewan, around Kindersley.

Renegade’s work has had some overlap with Align, but most of their work is related to pipeline construction. Moser said, “Our speciality is pipeline and wellsite fabrication.”

With regards to their Saskatchewan work, Moser said, “In Kindersley, we went up there when oil hit the skids in April 2016 to do a business feasibility study. Prices were really weak at that point in time.

“We found a shop and yard, and executed a lease. We’ve been working up there since the summer of 2016,” He said. Since then they’ve done a substantial amount of work the three largest operators in the Viking play.

“We have multiple crews working up there consistently,” Moser said of Kindersley.

That includes trunk lines, gathering lines and flow lines. “We’ve done facility work as well – expansions on injection facilities, batteries and so forth.”

“It’s been consistent. We were cautiously optimistic, and we were surprised,” Moser said of their Viking work. “When we set up in 2016, we didn’t know what to expect. We knew that area was a void for pipeline contractors. There wasn’t a big local presence, like in some areas, like Estevan.”

With shallow gas in southern Alberta being in the tank for the last decade, there were a lot of good, experienced, qualified people looking for work, and Kindersley wasn’t too far away.

“Guys were willing to make concessions to go to work, because the work was so steady and predictable. We were able to deploy some high calibre people to our clients, and they saw value in that,” Moser explained.

In Kindersley, Renegade averages about 20 people, and 30 in Medicine Hat. People and equipment are deployed as necessary.

Each company has around 50 people, bringing the combined total to around 100. “There won’t be any reduction. We’re hoping to be able to ramp up, now that we can face some of that larger work.” Casat said.

Align and Renegade have their COR in both provinces as well.

Moser noted that the west central Saskatchewan area seems to remain fairly strong, even when oil prices have been low. “It was good for us, good for our staff. There wasn’t a lot of work in southern Alberta at the time,” he added.

Merger

The combination of the two results in complementary capabilities.

Vada is the majority shareholder in Renegade. Of the combined company, Robson said, “We’re one of the partners.”

Vada, a Calgary-based private equity firm, is taking a minority stake overall. Vada has been around since 2001. Robson said he was an operations guy who grew up in the seismic business.

The merger was a long time in the making. Robson said they first talked about it three years ago. “It’s taken a number of years to get everybody on the same page,” he said.

Robson said a CEO hasn’t been named yet.

Vada has interests in a seismic exploration business, some financial businesses, and a few startups in the water business.

“Vada is buying shares from Align, and we are buying back into the combined entity,” is how Casat characterized the merger.

Asked about the motivations behind the deal, Casat said, “I think what we’re trying to do is provide strength and efficiencies for our clients. Renegade is more a pipeline-orientated company, whereas we’re more facility. So we’re able to offer both of those strengths to our clients, and more efficiently by sharing people.”

They’ve already begun sharing quality control and safety people. “By doing this merger, we’ve now captured this whole market and can provide that to our clients,” he said.

Casat explained, “We want to provide the best people possible. You have to retain those people. By joining, merging with Renegade, now we’re able to keep more of our core people busy. It’s not just what we have. If they have work, I can send a few guys, too, that I can’t afford to lose in this business. If I don’t have the work, it gives me the opportunity to keep those guys working, so they stay with us. And we can, in turn, offer the best people back to the client.

Moser said, “It just made sense, from a personnel, equipment, logistics and efficiency point of view. We had quite a bit more equipment than Align, being that we were predominantly pipeline, and they were facility. There were times that equipment was sitting. Now, post merger, we’re able to share our assets to make sure our utilization levels on our gear are higher, make sure our utilization levels on our personnel look better. Trucking was a big one.

“I think it will add new capabilities collectively,” Robson said.

Vada bought into Renegade in 2012, and Moser bought out previous partners six months later.

The merged company will eventually work under the Align name in the future.. Each division will operate similar to they are now, in what could be considered parallel management of the divisions.

Moser said, “I think it will give us the opportunity to look at bigger, more complex projects on the facility side, and on the pipeline side, because we’re going to have that much more bench strength with our people and our assets. It might offer a strategic component, where we can look at future acquisitions and growth initiatives, and access to capital with Vada capital behind us.”

Renegade had a brief presence in Estevan about a decade ago, under different ownership. It withdrew with the 2009 oil downturn.

“Putting these two businesses together made us very strong, and we want to continue being very strong. We’ll see what the future holds. There are a lot of things out of our control,” Robson said.

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